6/07/2010 @ 6:15PM

The Dr Is In At Coke

Coca-Cola
has bought the rights to distribute the product of one of its main competitors,
Dr. Pepper Snapple Group
.

The deal, worth $715 million, makes sense. Back in February,
Coca-Cola
announced it would buy
Coca-Cola Enterprises
, which, despite the name, has been a separate company from Coca-Cola. CCE was the distributor of
Dr Pepper Snapple Group
brands such as Dr Pepper and Canada Dry in the U.S, and Coke announced on Monday that it would stay that way. On top of that, it said it would also distribute C’ Plus and Schweppes in Canada. The deal has a term of 20 years, with 20-year renewal periods.

“We are pleased to have reached a fair and mutually beneficial agreement with Dr Pepper Snapple Group to continue distributing their brands, marking yet another key milestone in our acquisition of the North American operations of Coca-Cola Enterprises,” says
Muhtar
Kent
Muhtar Kent
, Coke’s chief executive.

Shares of Coke ended the day down 0.9%, or 47 cents, to $50.80. Meanwhile Dr Pepper Snapple Group slipped 1.8%, or 61 cents, to $35.85. Elsewhere in the industry,
PepsiCo
rose 0.5%, or 29 cents, to $61.73, while
Hansen Natural
decreased 1.5%, or 61cents, to $39.00.

“Importantly, this agreement aligns with our 2020 Vision of more than doubling our system revenue while increasing our system margins by leveraging the world’s most powerful distribution network,” Kent says. In February, Coke announced it would acquire Coca-Cola Enterprises, in a move that will put it in control of 90% of its bottling business in North America. (See “Coke Bottles Up.”) Coke’s acquisition of Coca-Cola Enterprises is scheduled to close in the fourth quarter.

As part of the deal, Dr Pepper and Diet Dr Pepper will be included in Coke’s Freestyle fountain dispenser, which can mix more than 100 drinks. Dr Pepper Snapple Group is investing an estimated $115 million to $135 million in the project.